April 24, 2020 / 9:11 AM / a month ago

China steel inventories extend fall fuelled by construction demand, nonferrous stocks ease

* Weekly steel products inventories fall to 20.13 mln T

* Destocking pace also depends on output plan at mills - analyst

* Copper stocks drop for six consecutive weeks

By Min Zhang and Mai Nguyen

BEIJING/SINGAPORE, April 24 (Reuters) - Steel stockpiles in China fell for a sixth straight week helped by accelerating demand in construction sector, but were still hovering near a five-year high as mills ramped up production after slowing output during the height of the coronavirus outbreak.

Stocks of steel products held by traders fell by 1.15 million tonnes to 20.13 million tonnes as of Thursday, data compiled by Mysteel consultancy showed. More than 70% of the fall was accounted for by construction use rebar and wire rod.

The construction sector has picked up rapidly since late March. Daily trading volume of steel products is even slightly higher compared with this time last year thanks to the government’s stimulus for infrastructure and resumption of projects.

Northern China resumed construction one month later than the south, which may lead to more demand, according to a Hebei-based trader who requested anonymity.

Zhuo Guiqiu, analyst with Jinrui Futures, expected more demand next week ahead of China’s Labour Day holidays which fall on May 1-5, while also expecting stocks to remain high if mills keep producing at a fast pace.

China’s crude steel output rose 1.2% to 234.34 million tonnes in the first quarter compared with same period year earlier.

The China Iron and Steel Association warned on Wednesday that high inventory could become the norm for this year.

NONFERROUS

Copper inventories in warehouses tracked by the Shanghai Futures Exchange (ShFE) CU-STX-SGH dropped for the sixth straight week on Friday to 259,037 tonnes, the lowest level since Feb. 7, as many businesses restarted operations in top consumer China.

“Demand has been surprisingly firm after the lockdown. The Chinese are back at work and they mean serious business, the only question is how the order books look like ... especially orders from outside of China,” said Anna Stablum, a commodity trader at Marex Spectron.

“We will only know when we see exports data coming out on how demand is slumping outside of China. And the question is how much domestic demand and incentives can counteract weakening demand in Europe and the United States,” Stablum added.

Inventories of all other industrial metals also fell, with aluminium inventories AL-STX-SGH hitting their lowest since February 28 at 458,403 tonnes, lead PB-STX-SGH dropping 10.3% over the week to 7,074 tonnes, the lowest since end-October 2018.

Zinc stocks ZN-STX-SGH fell 9.3% week-on-week to 133,349 tonnes, nickel inventories SNI-TOTAL-W eased 1.8% over the week to 27,461 tonnes, and tin stocks SSN-TOTAL-W fell 3.3% during the same period to 3,702 tonnes, their lowest since November 2019.

Reporting by Min Zhang in Beijing and Mai Nguyen in Singapore; Editing by Simon Cameron-Moore

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